My wife and I have combined CC debt of approximately $6k total. I have recently gone back to school for a masters degree – this semester, I was offered $8,500 in subsidized federal loans when my tuition bill was only $3k. Would you accept the full amount to payoff revolving debt to move it to subsidized student loans?

 

My logic:

 

1. Student loans are installment debt, and as such it would help my fico score to transfer the debt.

2. The interest rate on a federal student loan is capped at 6.8% (CC debt is at 10.24), and as long as I am in school I do not have to make payments and pay no interest.

3. We are not at any risk to run up further CC debt. We currently have over $50,000 in available CC credit, but have not and will not use it. The current balances were a result of our wedding and the birth of our first child.

 

 

 

A few years ago, I set out to start re-establishing good credit while I waited for those charge-offs to drop off my report.  During this time, I’ve paid everything on time.  Earlier this year, while preparing for my second marriage, I started to freak out about expenses and how much debt I was carrying (about $8,000 in credit cards and another $7,500 on a car note and $4,500 on a signature loan).  I promised myself that after the wedding, I’d make a plan to pay down the debt and rebuild my credit so DH and I can purchase a home next year when our lease on our apartment is up (in June).

 

I started paying off debt like a madwoman.  I cut all entertainment out of my budget as well as meals out.  I stopped taking weekend trips to see family and all in, I “found” $1,000/month to throw towards my debt.  At the end of August, I ran my credit report and according to TU it was 660 and on Experien it was 657.   I ran my TU again last night and found that it jumped to 673.  Our mortgage broker told us we’d qualify for a 5% down loan if I could get my credit to 680+.

 

Today, I signed up for Experien’s Score Watch, figuring it would be helpful to keep an eye on it since DH and I want to apply for a mortgage in late February/early March and discovered that my score went from 657 to 593.  The only thing on here that’s not on the TU report are my credit union loans – car loan, signature loan and one credit card.  I noticed that my credit union was reporting I was 90 days past due on my signature loan.  But I’ve paid them!

 

I called them and found out that because the loan is variable, my payment increased 14 cents.  I didn’t know this, so I became 42 cents past due over the course of three months.  They reported to Experien that I was 90 days past due on one month’s full amount.  Question 2:  Can they DO that?

 

I had them take the 42 cent payment from my savings account with them and sent an email to their loan servicing department asking them to fix their reporting to the credit bureaus since this was an oversight and not a willful lack of payment.  Question 3:  What do you think the chances are that they’ll fix this?  Can they fix what they’ve already reported?

 

Questions 4-5:  Other than paying down debt at an insane rate for the next 3-5 months, is there anything else I can do to help improve my score?  We have to get the scores to 680 in order to qualify for the lower down payment, but ideally, I’d like them to be 700+.  Is this totally unrealistic at this point?